Monday, July 03, 2017

Former Barclays Bosses Head to Court Over Fraud Charges

by Caroline Binham and Jane Croft in London
Financial Times

If one had to come up with a stereotype of a traditional English banker, John Varley would surely be it: bespectacled, well spoken, and fond of braces to hold up his bespoke suit trousers. On Monday, he will be adopting a less traditional role in the dock at Westminster magistrates court.

Mr Varley, the patrician former chief executive of Barclays, has the dubious honour of being the first CEO of a global bank to be charged with criminal offences emanating from the financial crisis.

He, along with three of his former high-flying colleagues at the bank, as well as Barclays itself, will appear at Westminster on Monday afternoon for the first time to officially face charges brought by the Serious Fraud Office.

The SFO charged Mr Varley and Barclays, along with Roger Jenkins — the former head of the bank’s Middle East business — with two counts of fraud by false representation over two emergency cash calls at the height of the financial crisis, when Qatar invested £6.1bn to keep the bank out of UK government control. The bank entered an “advisory services agreement” with Qatar worth £322m at the same time.

The SFO also charged them with a count of unlawful financial assistance over a $3bn loan the bank made to Qatar’s finance and economy ministry just as the second cash call was closing.

Tom Kalaris, the trusted lieutenant of Bob Diamond, who was head of the investment bank at the time, and Richard Boath, who chaired the bank’s financial services team, were also charged with a single count of false representation over the first fundraising.

According to the magistrates’ court list, Chris Lucas, who was finance director of Barclays in 2008, has been named as an alleged co-conspirator on the two charges of conspiracy to commit fraud by false representation spanning the period between May 1 2008 to November 30 2008 which Barclays faces.

Mr Lucas is also listed as a co-conspirator on the single charge faced by Mr Boath and Mr Kalaris and on the two fraud charges faced by Mr Jenkins and Mr Varley.

The FT has reported that the SFO had told suspects that Mr Lucas, who has Parkinson’s Disease, would not face any charges because that would not be in the public interest.

The charges represent a fall from grace for Mr Varley, the son of a solicitor who was head boy of Downside, the Catholic boarding school, before reading history at Oriel College, Oxford.

He joined Barclays in 1982 and married a descendant of the old Quaker banking family who founded the Darlington bank J & JW Pease, which later became part of Barclays. He became chief executive in 2004; a role he held at the time of the cash calls in 2008.

Monday’s hearing is likely to be short but the SFO’s barrister, Ed Brown QC, will likely outline the prosecution allegations. One question that may be answered is how it will portray the role of the Qatari investors, who have not been charged with any offence: Qatar Holding, the Gulf state’s sovereign wealth fund, and Sheikh Hamad bin Jassim bin Jabr al-Thani, the prime minister at the time who went simply by the term HBJ.

The individual defendants are expected to be asked to stand in the dock and identify themselves. The company will be represented in court by a barrister, Richard Lissack QC.

One aspect of the hearing will be whether any of the defendants — including Barclays — indicate how they will plead. Defendants do not have to officially enter a plea until far later in court proceedings but they can give an early indication if they wish.

Mr Boath and Mr Jenkins have already made it clear they will vigorously contest the charges but Mr Varley and Mr Kalaris have so far made no comment, while the bank has said simply that it is considering its position.

The SFO is still to decide whether to charge the bank’s subsidiary, Barclays Bank Plc, in respect of the $3bn loan. Criminal charges at this operating level would be problematic for the bank because regulatory authorisations and operating licenses are granted to the subsidiary rather than the parent group.

In most white-collar prosecutions, defendants are granted unconditional bail. Defendants are generally granted bail unless the court believes that a defendant will abscond from the UK, commit other offences or obstruct the course of justice.

The case is expected to be sent to Southwark crown court, which hears complex fraud cases, with first hearings expected in late July and then September.

The defendants will all be represented by a stellar legal team. John Kelsey Fry QC, one of the criminal bar’s top advocates, is representing Mr Jenkins. He represented Harry Redknapp in a high-profile tax trial in 2012 from which the former Tottenham Hotspur manager was cleared.

Mr Varley, meanwhile, has turned to Nick Purnell QC, one of the country’s top white-collar silks whose punchy defence of Victor Dahdaleh, an Anglo-Canadian “power broker” accused of corruption in Bahrain, ended in disaster for the SFO after the trial collapsed.

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